Tg Therapeutics, Inc. Q3 FY2022 Earnings Call

Greetings and welcome to the TG Therapeutics Third Quarter Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Bosco. Thank you, Jenna. You may begin.

Thank you. Welcome, everyone, and thanks for joining us this morning. I’m Jenna Bosco, and with me today to discuss the third quarter 2022 financial results and provide a business update are Michael Weiss, our Chairman and Chief Executive Officer; Adam Waldman, our Chief Commercialization Officer; and Sean Power, our Chief Financial Officer. Following our Safe Harbor statement, Mike will provide an overview of our recent corporate developments, Adam will provide an update on our commercialization efforts, and Sean will provide a brief overview of our financial results before turning the call over to the operator to begin the Q&A session. Before we begin, I’d like to remind everyone that we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about our anticipated future operating and financial performance, including sales performance, projected regulatory milestones, clinical development plans and expectations for our marketed and pipeline products. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics operations include various risk factors that can be found in our SEC filings. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. This call is being recorded for audio rebroadcast on TG’s website at www.tgtherapeutics.com, where it will be available for the next 30 days. Now, I’d like to turn the call over to Mike Weiss, our CEO.

Thanks, Jenna, and good morning, everyone. Thanks for joining us on the call. The third quarter of 2022 was a very productive time for TG as the team really came together to execute our pre-launch commercialization plans. As we have mentioned previously, our goals for this year are to work toward an FDA approval for ublituximab in relapsing forms of multiple sclerosis and to be prepared, if approved, to launch early next year. We’ve guided that our goal was to dedicate the resources necessary to achieve these goals and minimize or eliminate all other expenses. I am pleased to report that our streamlining and focusing efforts have been extremely successful in reducing our overall burn while reserving our resources to support the potential approval and launch of ublituximab. Sean Power, our CFO, will join us shortly to provide some additional details, but our burn for the third quarter was approximately $34 million, down substantially from prior quarters. I am proud of the hard work and team effort that was required to realize these cost savings while ensuring we were all well-positioned financially for the potential launch of ublituximab. Also in just a few minutes, Adam Waldman, our Chief Commercialization Officer, will join us to provide more details around our launch planning and progress, which from my vantage point seems to be moving along quite nicely. We believe that if approved, ublituximab has the potential to play a meaningful role in the treatment of multiple sclerosis, and we remain committed to offering patients a highly active treatment option with the convenience of a one-hour infusion administered every six months following the first dose. With that, let me remind everyone of our Phase 3 program that supports our BLA submission for ublituximab in relapsing forms of MS, also referred to as RMS. The ultimate trials evaluated ublituximab compared to teriflunomide, enrolling approximately 1,100 patients across 10 countries and were led by Dr. Lawrence Steinman of Stanford University. As noted in the past, both studies met their primary endpoint with ublituximab treatment demonstrating a statistically significant reduction in annualized relapse rate, also referred to as ARR, compared to teriflunomide. In addition to the positive primary endpoint results, we’ve had the opportunity over the past year to present several different sub-analyses of this dataset, which we believe continues to show an encouraging profile for ublituximab for the treatment of patients with RMS. Most recently, we presented five additional exploratory datasets at the 2022 Annual Congress of the European Committee for the Treatment and Research in Multiple Sclerosis, which I will refer to as ECTRIMS. The team engaged with numerous KOLs during this meeting, and the feedback we received around the profile of ublituximab was highly encouraging, supporting the potential for ublituximab to treat patients with RMS, if approved. On the regulatory front, as in the past, we will not provide detail on any interactions with the FDA but would like to provide an update on where we are in the process, with less than two months to the target PDUFA action date of December 28, 2022. We can confirm that we have completed the late cycle meeting, and labeling discussions have recently commenced. We remain hopeful that ublituximab will be approved. If approved, we’ll be excited to make ublituximab available to many patients with RMS that are in need of additional treatment options. I will also mention that our efforts with the EMA for EU approval are moving along from a timing perspective; potential approval could occur in the second half of 2023. We are still assessing the go-to-market strategy in Europe, evaluating whether to go it alone or to partner outside the U.S. So with that, let me turn the call over to Adam Waldman, our Chief Commercialization Officer, to share some thoughts on our preparation over the past quarter as well as his thoughts on the potential commercial opportunity and plans for ublituximab in RMS. Adam?

Thank you, Mike, and good morning, everyone. I am excited to provide an update on our commercial activities, as we have made considerable progress over the last several months in our preparation for the anticipated ublituximab launch in relapsing forms of multiple sclerosis. MS is a debilitating chronic disease that can have a significant impact on the quality of life of patients and their families. The CD20 class has truly transformed the way MS is treated, and physicians believe that using these agents early may significantly impact the natural course of the disease. Today, approximately one out of every two patients starting a new therapy will go on to CD20. In fact, market data shows that in the second quarter of 2022, there was the highest share of CD20 usage we have seen since these agents were launched. This is a large and growing market. Based on our market research, we believe ublituximab has the potential to capture meaningful market share. We understood from the moment we started working in this space that one of the keys to success would be to hire a team of MS-experienced professionals with a deep knowledge of the landscape and strong relationships across the MS community. To that end, we have been methodical in how we have hired our commercial field teams and have hand-selected people that fit our target profile. Over the last several months, we have significantly ramped up our hiring, adding critical field-based customer-facing roles in sales, sales leadership, and access and reimbursement support. Our hires, on average, have over 12 years of MS industry experience. They joined our previously hired field-based regional marketing team, as well as our payer and medical teams, which have been engaging providers and payers for the last 12 months. At this point, we have met our internal hiring goals for our field-based team members, and we will be working over the next several weeks to finalize the hiring and training of these teams to be prepared for launch. Our team also understands how important it is to get this drug to the patient community and is working hard to ensure we do everything we can to provide access to ublituximab once approved. One of the biggest frustrations for physicians and practices in general is navigating the process of access and reimbursement for therapies. We have, therefore, placed significant emphasis on ensuring that the process to access ublituximab will be as seamless as possible. I am extremely proud of the progress our team has made over the last several months building our capabilities in this area. First, from a payer perspective, our national account teams are doing a great job engaging with national and regional payers over the last year. Feedback on the clinical profile of ublituximab has been positive, and we do not foresee any major issues with reimbursement. However, with any new product, payers will need to work through their processes over the first 90 to 180 days post-launch. Second, we have made considerable progress understanding the institutional formulary process and have plans in place to work with key MS centers of excellence to include ublituximab on their formularies as soon as possible. Third, we know the majority of MS patients will opt into patient support programs, and this is another critical component of ensuring access. We have worked very closely with key customers to build what we believe will be a best-in-class patient support program, and we are on track to be ready to launch this program alongside ublituximab once approved. Lastly, we have now hired an experienced field-based access and reimbursement team that will work with accounts to facilitate access to ublituximab. In summary, we have made tremendous progress on building and strengthening our commercial capabilities over the last 12 months, which has accelerated over the last few months as we ready the organization for the possibility of ublituximab launch. We have built an incredible team, which we believe is as experienced, if not more so, on a pound-for-pound basis than any MS team in the industry. These teams are ramping up their activities, actively engaging key participants in the MS community, KOLs, community neurologists, payers, and advocacy groups at conferences, advisory boards, and other engagements. Our confidence continues to grow as the feedback on ublituximab’s profile and the way we have built our commercial team has been very positive across the board. We believe this launch represents a significant commercial opportunity, and all of our attention, focus, and commercial resources are aimed at making this a success. We continue to move forward with a sense of urgency and purpose as we know ublituximab, if approved, will be an important new option for patients managing this debilitating disease. And with that, I’m going to hand it over to Sean.

Thank you, Adam, and thanks, everyone, for joining us this morning. Earlier, we reported our detailed third-quarter 2022 financial results, which can be viewed on the Investors & Media section of our corporate website. For today’s call, I’ll focus on a few highlights from the quarter, beginning with our cash position. We ended the third quarter with approximately $198 million in cash, cash equivalents, and investment securities. Coupled with the additional capacity available under our Hercules facility upon ublituximab approval, we believe this will be sufficient to carry us into 2024. We are pleased to report that our burn for the third quarter of 2022 was within our previously guided range of $45 million to $50 million, landing at approximately $34 million for the quarter, also well below prior quarters. As Mike mentioned, this is the result of our determined cost savings measures and our focused preparations for the upcoming launch of ublituximab, along with some timing differences that we will incur in future quarters. Our GAAP net loss for the third quarter of 2022 was approximately $36 million or $0.26 per share, which represents a decrease of almost $50 million from Q3 of 2021, where we saw a net loss of approximately $86 million or $0.65 per share. Compared to the prior year quarter, the decrease was driven by across-the-board decreases in R&D and SG&A, primarily due to a streamlining of our oncology operations and a shift in focus to our MS development and launch preparation efforts. The GAAP net loss for the nine months ended September 30, 2022, was $145.3 million or $1.08 per share, compared to a net loss of $254.8 million or $1.93 per share for the comparable quarter in 2021, representing a decrease in net loss of more than $100 million period over period. In terms of what we expect moving forward, we project our burn for the fourth quarter of 2022 to be between $40 million and $50 million, which we believe leaves us well-positioned through the anticipated MS PDUFA at the end of the year. With that, I will now turn the call back over to the conference operator to begin the Q&A.

Thank you. Our first question is from Ed White with H. C. Wainwright. Please proceed with your question.

Good morning. Thanks for taking my questions. So just on the EU opportunity, you had mentioned the EMA timing is the second half of '23. Can you describe the opportunity in Europe? What is the market like? What are your expectations for it? And then as far as partnering, if you’re going to partner, when should we expect to hear something like that? Would that be prior to approval or do you think that would come after approval?

Hey, Ed, thanks for the question. So the EU opportunity is interesting. I think the EU currently represents about 20% of the overall market opportunity for CD20s, so it’s a reasonable size piece of the market, but it’s not obviously a large portion. So it’s not a high focus for us. Most of that, in terms of dollars, is in Germany. Other countries do play a role, but they are in much lesser amounts. So as we think about the opportunity and potentially setting up an organization in Europe, I think it would probably be Germany focused initially and then expand from there, if we proceed on our own. In terms of the timing of a partnership, we’re not running any specific timing on that, but it could happen either before or after we launch there; it's always very speculative. But I would say again, if our ultimate decision is to partner for launch, then it would invariably happen in advance.

Okay, thanks, Mike. And you’ve done an incredible job on cost cutting. I’m just thinking about how we should consider R&D expenses going forward? You gave some guidance on SG&A being up in the quarter. What are the R&D opportunities? How should we be thinking about that? And how should we be forecasting the expense for that line?

Yes, I would expect that the R&D expenses will continue to decline. Again, we still have oncology trials that are hard to completely shut down. So we’re carrying some of those expenses still. But as they continue to decline, we will start new studies around ublituximab in MS and potentially outside of that. So I think it continues to decrease for the next quarter or two, but maybe Sean wants to chime in, and then it probably starts to creep back up in the second half of next year. Sean, is that about right or do you have any additional comments?

Yes, no, I think that’s fair, Mike.

Great. Thanks for taking my question.

Thank you. Our next question is from Chris Howerton with Jefferies. Please proceed with your question.

Great. Thank you so much. I just wanted to ask a couple of questions on the expected commercial dynamics. Ofatumumab has been doing a little bit better in the launch, so I was curious how you were thinking about the differences between dosage forms in CD20s, and maybe if there would be some differential patient or physician targeting between those two. So that would be one question. And then the second question I have is just a kind of housekeeping thing as I was looking at our model. What is the latest kind of IP expiry that you’re expecting might continue?

Sure. So on the IP side, I think the patents for ublituximab, with a term extension, are expected to expire in 2032, 2033. Assuming there is an approval, we will be entitled to 12 years of market exclusivity for biologics. So, that would actually put us into 2025 or very late 2024, and this means possibly extending to late 2034 or early 2035 for the 12 years. Sorry about that. And then we do have some other patents that we haven’t spent much time discussing that could extend out for another 5 to 10 years plus. So we think we’ve got a pretty good runway with the patents in place with the biologic relativity and potential with some other patents behind the scenes. I will briefly answer your first question and then let Adam discuss it. But it’s interesting in terms of the dosage forms; it’s really become somewhat two discrete markets. I think the prescribers view these products somewhat differently and in different settings in which they might want to use them. Most doctors and patients, as we heard in one-on-one engagements yesterday, are not interested in dealing with their disease once a month. But it does seem that the subcutaneous option has a nice role for patients who travel long distances to their MS provider. We had projected early on that subcutaneous might represent about 30% of the market. It feels like that dynamic share is capping out there, and the overall market share continues to grow as people come on and stay on treatment. So, I think that’s about how we believe it’s going to continue to unfold. About 70% of the patients will continue to receive an IV CD20, and about 30% will go with the subcutaneous option. Adam, please add some more color.

I think you pretty much covered it, Mike. The only thing I would add is that it does seem like the market, with KESIMPTA launching, has continued to expand. Perhaps that’s outside the centers of excellence and into more rural areas, and perhaps towards more general neurologists. But what Mike said pretty much summarizes our thoughts on that.

Okay. And maybe just as a minor follow-up, if you’ll entertain it, Adam, and then Mike as well, would you – I guess, how are you thinking about targeting those physicians that would be more likely to prescribe IV versus subcutaneous? Do you have that visibility, do you think?

Yes, I’ll start, Mike, and we can add. I think MS centers of excellence that have infusion capabilities are a logical place to start for IV therapies, and that’s where we believe the initial focus should be. The majority of OCREVUS use is, as I mentioned, seen in those large MS centers of excellence and very large community centers with infusion capabilities.

Yes, I’ll add to that, Chris, that when we think about the highest ROI for us, obviously, it’s going after the sites Adam has referred to. The general neurologist is just beginning to get into CD20s, and that has been a significant effort for Roche, Vectrus, and Novartis teams. I believe those more rural environments are going to be good areas for something like KESIMPTA where patients are far from their physician’s office. But for us, the vast majority of the business and the current OCREVUS business is concentrated in those large centers of excellence and large community practices.

Okay. That sounds excellent, and a more efficient business model, it sounds like too. So, thanks, guys.

Thanks, Chris.

Thank you. Our next question is from Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Hi, thanks for taking my questions, and congrats on the progress, guys.

Thanks, Matt.

Just wanted to take Chris’ question a little bit further. Can you comment on Roche’s subcutaneous programs and their high-dose program as well? And how do you think those will impact the market other than what you said?

Yes. So I’ll start, Adam, you could chime in. We don’t know a ton about those programs. I mean, we know from certain timing that the subcutaneous formulation could be available in the next two years, give or take. As for the high dose, we don’t really have any good visibility into where they are with that other than to say that I think their high-dose strategy is to try to compete off of our potentially perceived better activity with the more potent CD20. So we will see how that works out for them. But again, it may take them a long time to get the material into the patients. So I don’t think that’s a strategy that’s going to provide a lot of additional competitive advantages for them. As for the subcutaneous side, there are issues with that subcutaneous formulation. It’s been used in other products, some of which have been very successful, others have not. So I think the jury is still out on Roche's ability to deliver that effectively. Adam, anything further or additional color?

Yes, I think you covered it, Mike. I think we will wait to see what the actual profile of that looks like and what’s required from a pre-medication and post-monitoring standpoint. That all adds time, and we believe that convenience and streamlining the experience does matter in this market. It’s an important aspect of the overall experience, both from a patient perspective and convenience, but also from an office perspective.

Okay. Thank you. And you mentioned the plans for continued development of ublituximab. Can you talk about your plans for progressive MS in the future following approval?

Yes. We are exploring that area. I don’t think we have any plans to discuss today, but we have certainly been engaging with KOLs to understand what the needs are and what they believe would be a successful trial design in that area.

Okay. And then last question, I guess maybe for Adam. Following approval, what will your commercial team look like in terms of size, footprint, and from where it is now?

Yes. Thanks, Matt. We are pretty much in a good position at this point. As I mentioned in our prepared remarks, we have hit our internal timelines for hiring. Our footprint from a field-based perspective is about 80 to 100 people. We feel like this is, as we were discussing with Chris, a targeted approach. We know where we need to be to secure this business. MS centers of excellence and large community centers will be our focus. We believe we have a team that will be more than adequate to cover this, and we are well-positioned right now, and we will be ready for launch come early next year.

Great. Thanks a lot and good luck in December.

Thanks, Matt.

Thank you. Our next question is from Eric Joseph with JPMorgan. Please proceed with your question.

Good morning. Thanks for taking the question. Can you just expand a little bit on your access strategy from the patient perspective? I am curious to know if there is much opportunity to compete with other therapies when it comes to co-pays borne by the patient? I would also be curious to get your latest sense of how sensitive payers are to price. And finally, just on cash position. Sean noted being capped through 2024, and I am wondering whether you are considering any financing alternatives to support the launch, perhaps royalty monetization?

Thanks. Adam, do you want to take the first question?

Yes. Thanks, Eric. I think we are going to compete very well from a patient access perspective. As I mentioned, we have built a best-in-class patient support program. We will offer all of the support initiatives that these companies provide. Specifically regarding a co-pay program, we will have one, and we feel that we are well-positioned to support practices and patients. As for your question regarding payers and sensitivity to price, I think we’ve heard that payers are interested in inviting competition into the market. They are looking for the lowest net cost, and I believe they are sensitive to that. We’ve gotten feedback from them and have identified how we want to price this going into the launch.

Great. As for cash position and alternative financings, I think we are keeping all options open in terms of ideas on how we want to proceed. However, we’re not in any rush. We have sufficient funding to launch on day one and move money into 2024. So, it’s not an emergency situation. We are not overfunded, but most of the money will be sitting in the bank while we prepare. We feel quite good about our cash position even though it might not look like much to others. We expect to generate revenues in the first year, which will also extend our burn number into 2024. We have plenty of options, and yes, royalty monetization remains on the table, along with other potential financings depending on market conditions when we reach the launch phase.

Okay. Thanks for taking the questions and good luck as you approach December.

Thanks, Eric.

Thank you. And our next question is from Mayank Mamtani with B. Riley. Please proceed with your question.

Hi. Good morning team. This is Sahil Kazmi asking a couple of questions for Mayank. What are your expectations for the potential labeling interactions as we are getting closer to the PDUFA date? And how could the warning section be differentiated from Ocrevus, for example?

Yes. So, thanks for the question. We disclosed earlier that the labeling discussions have commenced, but we are not going to provide any further detail. So, I don’t have much more to add, and the same goes for the second part of your question.

Okay. Great. And then just on the recent ISO report that came out, what are your top-line thoughts on how you are navigating through some of the payer discussions more broadly, perhaps for Adam as well?

Yes. I will lead off, and I’ll let Adam take over. However, we have been reviewing the ISO report and will probably offer official comments on it soon. Generally speaking, ISO's role is to influence how we price the drug. There was a clear reason they released the report before we launched; it was about trying to influence our pricing approach. As you know, we have always thought about coming in at a lower price point. While it’s not a new concept for us, some of their analysis is skewed and certainly appears to be biased. But I’ll let Adam maybe address the overall care access environment.

Yes. With regards to the ISO report specifically, we don’t believe it’s going to affect our access, and payers haven’t really reacted to it. We feel confident about the value proposition we are bringing with ublituximab and believe our payer strategy, along with our pricing perspective, will not see any major issues with reimbursement and coverage.

Excellent. Thanks for taking our questions, and best of luck with the PDUFA.

Thank you.

Thank you. Our next question is from Prakhar Agrawal with Cantor. Please proceed with your question.

Hi. Good morning and thanks for taking my questions, and congrats on all the progress. So, firstly, a quick clarification. If you can remind us if there are any inspections left for the FDA? And could you talk about your readiness in terms of drug supply at launch? I had a follow-up.

Yes. We haven’t provided any detail on inspections, so I will pass on that question. And what was the second part?

Readiness regarding drug supply at launch?

Yes, we have plenty of drug supply for launch. We have a large manufacturing arrangement with Samsung Biologics, and we are comfortable with our launch supply.

Okay. And secondly, Mike, you mentioned you presented the data several times over the past few months. Can you talk about what you are hearing from specialists regarding what excites them about ublituximab? What key factors stand out? And what’s their willingness to switch loyalty from Ocrevus?

Sure. Thanks for the question. When we go around and talk to physicians, our goal is to just present the data as it exists. We think the data speaks for itself. What we find is that different clinicians will resonate towards different aspects of the dataset. Some physicians will look at the annualized relapse rate; they believe that this is the best option available for their patients. Others consider the tolerability, as well as the speed with which we can deliver the infusion. It’s not just about the one-hour infusion; it’s about the consistency and tolerability. Ocrevus continues to have high rates of infusion reactions, upwards of 20% to 25%, even after the third or fourth infusion. Our tolerability rates continue to remain low. I think tolerability is something many doctors are resonating towards. Again, we don’t make direct comparisons, but physicians will do their evaluations in their heads. The one-hour infusion also has both patient and practice convenience, so I think it’s a varied response. Our job is to ensure we present the facts.

Thank you. I look forward to December.

Thank you.

Thank you. There are no further questions at this time. I would like to hand the floor back over to Mike Weiss for any closing comments.

Great. Thank you. And thanks, everyone, again for joining us this morning. As discussed multiple times today on this call, with the target PDUFA action goal date of December 28th, our primary focus is and remains working toward approval for ublituximab for patients with relapsing forms of multiple sclerosis, and if approved, being prepared to launch early next year. We believe ublituximab could be a meaningful treatment option for patients with RMS. We believe treatment options are essential when it comes to treating chronic illnesses like MS, and we are committed to supporting the MS community. Thanks again for joining us this morning, and have a great day.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.